Electronic computers are playing an increasingly important part in this age of automation.
Recognition of this fact by the General Electric Company was reflected in
a speech on Automation presented by Mr. Ralph J. Cordiner. President of
General Electric, before a Congressional Committee
in Washington, D.C., October 26, 1955. Mr. Cordiner closed his speech with
the following:

To sum up:

1. The computer is an important invention which extends
the capacity of the human mind.

2. The computer is essential to our national defense,
and in the advanced design of military equipment.

3. The computer will help business to produce better
products at lower cost.

4. By providing better and more timely information formanagement, the computer will help to improve the stability of
employment through better planning.

5. The computer-derived technologies
will create new products and new industries which will be major sources of
new employment in the coming years

SUMMARY

The purpose of this exhibit is to outline our proposed
method of approach in converting the "research model" ERMA
system into a well engineered and soundly manufactured product. This
product will be first installed by the Bank of America. but will also be
manufactured for and aggressively marketed to other banks throughout the
country.

Conversations with both the Bank of America and Stanford
Research In­stitute personnel have firmly established the basic
philosophy on which this program must be based. To take advantage of
recent technological advances. and to insure that the initial ERMA
represents an economically sound system. the first
production ERMA, should represent a substantial step
forward from the research model in terms of packaging and product design.
though it will not incorporate any major changes in computer or system
logic. This means. in particular. the design and utilization of transistor
circuitry wherever applicable. It means also the use of a host of circuit
design innovations aimed at reducing cost and improving reliability.

In prosecuting this program we propose to move our
computer engineering group into Stanford Research Institute quarters at
once. and to work with their engineers in establishing a firm system
specification calling for the maximum possible
degree of modernization. The degree of improve­ment to be incorporated in
ERMA IA is primarily a matter of time and cost. We have endeavored to
measure these factors and to specify ERMAs that are not only highly useful
devices for the Bank of America. but which are also marketable to other
banks. This conception will be refined and sharpened by intensive study to
be initiated immediately.

In addition to producing modernized ERMAs from the
onset. we will conduct a continuing program to develop improvements and
modifications of the system as new techniques and methods permit. As
appropriate.

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such improvements will be incorporated into the
production line equip­ments and in many cases# retrofit kits will be made
available for incorporation in earlier production models. By these means,
ERMA IA can evolve into an even more economical and modern system. and
need not fear early obsolescence.

If this course is followed# there need be no abrupt
transition to an ERMA II system over the next several years. Nevertheless.
with the continued cooperation of Stanford Research Institute# we
Will conduct research and advanced development aimed at major and
fundamental improvements in system philosophy and implementation, and will
Insure that both we and the Bank of America .maintain a commanding lead
overall competition in this field.

To the General Electric Company, ERMA does not merely
represent a product to be built and marketed over the next four to five
years. It will be a continuing and long-term product line of our
organization. As such, its continued advancement will benefit continuously
from the output of the thousands of scientists and engineers in our famous
Research Laboratory and our many Division laboratories. This is the truest
guarantee which We can make of the long range success of the program.

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ERMA IA AND MODERNIZATION PROGRAM

As in any technical development, the construction of ERMA I has shown
the way to an improved machine having definite advantages over the
original. This machine, termed ERMA IA in this proposal, will be the
result of substantial design improvements. The primary objectives of this
design will be the reduction of initial cost of the machine, the reduction
of operating cost and improved reliability and ease of main­tenance.
Additional benefit~ which may be expected are an increase in the number of
accounts handled by each equipment and the incorporation of several
additional routines. The following section described some of the detailed
considerations which will guide the design of ERMA IA. The various
design features described are obviously tentative, inasmuch as
they cannot be firmly specified either by Stanford Research Institute or ourselves until after check-out of ERMA I
and
mutual study of cost and time considerations. Nevertheless, they do
represent our planned method of approach.

Basic Considerations

The design of ERMA I attempts to satisfy the requirements of the
check handling problem of the Bank of America by allowing several logical
processes to occur simultaneously in the machine. This design allows the
use of fairly slow clock frequencies and components, including a large
amount of relay switching in the logical paths themselves. An alternative
is to increase the speed of operation and reduce the number of
parallel operations taking place in the computer. The General Electric
Company believes that the proper compromise is toward higher speed, with a
reduced complement of equipment result in fro fewer simultaneous logical
paths.

The higher speeds result in the replacement of
substantial portions of the relay switching circuits by electronic
units using semi-conductor

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or magnetic elements. These have proven records of
reliability and exceed in this, respect the electro-mechanical devices
employed in ERMA I. The use of these newer devices in the logical and
arithmetic portions of the ERMA IA computer would reduce or even
substantially eliminate the present complement of vacuum tubes. Magnetic
elements and semi-conductor devices such as transistors will be considered
in more detail below.

A higher speed of operation will allow the use of other
schemes to reduce the complexity of ERMA IA. One of these is
increased use of built-in function tables for sequencing the logical
operations and arithmetic procedures. Alternatively. program sequences
stored on a small auxiliary drum or tape unit may prove
to be more economical. In either case the logical complexity of the ERMA IA
equipments will bereduced. Additional benefits from this approach include
the provision of multiplication in the arithmetic internal orders of
the machine. This would make feasible such routines as service charge
computation based on average minimum balance.

Detailed Considerations

Data Input

The character sensing equipment
developed by Stanford Research Institute is an important advance in the
art. and appears to be exceptionally reliable and satisfactory. Maximum use should be made of
this equipment in reducing the operator load. The entry
of account number by automatic means is in process for ERMA I. This should
be retained for ERMA but in addition the amount should be coded at previous
verification stations and also entered into ERMA IA by
character sensing.

The keyboard layout may well be
subjected to minor modifications. mechanical design presently used should
be replaced by a simpler

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structure and the necessary verification operations done
within the computer. Whether this will be feasible can only be
determined by study.As an example of the type of solution which may be
satisfactory, simple pushbars for manual entry may be combined with avisual
operator display, to show the operator what is entered
without automatic pull­down mechanisms.

Means for loopcheck on all entries must
be preserved under such a mode of operation.

The Use of Drums

Drums are employed in ERMA I to store input data and to
provide rapid determination of overdrafts, stop-payments etc. The two
large drums and their associated equipment form an expensive portion of
the overall machine. The determination of overdrafts could be made from
the account tapes" but 'this would delay recognition of this
condition until the end of the current run. In extreme cases overdrafts
might not be detected until the end of the business day. The advantage of
such a procedure would be to reduce the requirement to perhaps one
drum" or permit the elimination of drums entirely. The latter would
also be desirable from a maintenance standpoint. At present, drums on ERMA
I are run 24 hours a day to prevent mechanical damage due to thermal
contraction. While resigned drums may avoid this" they remain an item
of expense and concern.

Methods for reducing the detection time for
overdrafts" etc. to an acceptable value" while eliminating the
drums entirely will be con­sidered for the design of ERMA IA. One such
method is described in the next section.

The Use of Tape Loops

The account tapes on ERMA I contain the basic record
data in the

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ordered sequence of account numbers. They
are brought up-to-date from the drums. If the balance information were not
retained on the drums, overdrafts would not be detected until the account
tapes are revised. Ideally each item should be filed on the account tapes
as received, but this is not feasible due to the search time. It would be
possible to revise the account tapes continuously from a circulating tape
loop containing ordered entries, and capable of storing at least

v one item per account number. If this loop is capable of one complete'
pass during a time satisfactory for overdraft detection, a drumless

system may be built. It appears feasible to detect
overdrafts within about four minutes. which should be satisfactory. The
four minute loopwill be buffered to the input
station by a shorter loop, of the order of one second per pass. The
function of this loop is to store incoming entries so that they may be
inserted in ordered fashion on the four minute loop: .

The system just described would assure final disposition of incoming
checks within about four minutes. It would completely eliminate magnetic
drums, and replace these by reliable tape drives in case of

breakdown
of the tape units the four-minute tape may be placed on aspare
and operation resumed. No corresponding measure is available for drums, as
the latter are too expensive to allow for spares. The system is
potentially capable of being loop-checked at every transfer, and should
thus be reliable.

The use of tape loops or other means for reducing or eliminating drums
appears to promise reduction of cost and complexity. Various systems will
be studied and the best incorporated in ERMA IA.

The Use of Transistors

Transistors and other solid state devices such as diodes are
potentially capable of replacing vacuum tubes in the design of computers.
The General Electric Company has been a leader in the development and

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(page 7 seems not to be
present in this copy nor at CBI either... -Editor- EAS)

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reliability of magnetic elements greatly
exceeds that available from the best tubes or transistors. Their use in an
accounting data processing system is thus very appropriate.

The General Electric Company through its metallurgical activities has
been a leader in the development of magnetic materials. The Company is in
the enviable position of being able to formulate and produce magnetic
materials to its own specifications in its own specialized production
facilities at Syracuse and Schenectady, New York. Its grain oriented
steels exceed in performance the best available from other sources and it
is engaged in the manufacture of ferrite materials of

the
required properties for computer components. These developments will
directly benefit the design program for ERMA IA..

Magnetic cores may be used in the arithmetic, logical and storage
sections of digital computers. The first two uses are directly applicable
to ERMA IA and the vacuum tube and transistor requirements may be greatly
reduced, while increasing the reliability of the remaining components. In
the storage section the cost of ferrite core storage exceeds that of
magnetic tape by a considerable margin, and the use of cores for storage
is justified only in high-speed access memories which are not required for
ERMA IA.

It is the opinion of the General Electric Company that the most
economical and reliable design for ERMA IA. will rely heavily on magnetic
cores and transistors, and will contain a minimum of vacuum tubes. The
complete elimination of the latter is not considered economical or
necessary" providing their number will be in the hundreds instead of
the thousands.

The Use of Accuracy Checks Within ERMA

The logical design of ERMA I makes considerable use of loop and parity
checks upon internal transfer of information. This valuable feature

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of the design must be retained at all costs
in an accounting machine. Additional checks, such as in the arithmetic
units themselves, may well be advisable in ERMA IA. This is particularly
true if multiplication and division are to be incorporated from stored
programs. This would permit incorporation of a reliable service charge
computation based on average minimum balance. Overdrafts as a result of
service charges could also be detected at slight reduction in simplicity.

The programming counters used in ERMA I now operate without check, so
that a miscount in the logical progression could occur. Checks on these
counters appear to be advisable. In any case the use of stored

programs
and reduction of parallel operations will reduce the work load on these
counters, further reducing them as a source of errors.

At present three different codes are used in ERMA I. They are employed
in arithmetic and transfer, teletype data loading and magnetic tape
sections respectively. Considerable simplification and economics might be
derived from choosing a common code applicable in all

sections
of ERMA IA. Code conversions would be minimized and the logical units
standardized to a greater extent. This problem merits serious attention in
the design of ERMA IA.

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PROGRAM

As will be recognized from the foregoing, advances in the art of
computer design since the inception of the ERMA program promise an
improved ERMA IA of lower cost, and exhibiting high degrees of reliability
and ease of maintenance. To achieve these results as quickly as possible,
we propose the following:

2. Establish an engineering facility at Stanford Research Institute,
adjacent to the Mark I engineering building.

3. Start construction, at General Electric expense, of an additional
wing to the General Electric Microwave Laboratory in Palo Alto. This space
would be available some nine months after program start as the
headquarters for the ERMA engineering, final

assembly,
and system test. Component construction and assembly will take place in
our extensive Electronics Park facility.

4. Engage the services of the Stanford Research Institute.

5. Engage a number of the Stanford Research Institute technical people
on our payroll when appropriate, and per orderly arrangement with Stanford
Research Institute.

6. Direct the fundamental research and development work in General
Electric Laboratories to areas which will be applicable to future ERMA
computers.

Our manufacturing facilities, wherein we are most expert in electronic
work, are more than adequate to meet any foreseeable requirements.

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We have major competence in the
establishment of new facilities to meet a particular situation, as is
indicated for this project. We plan to combine these in the most efficient
manner by producing the electronic units in our Syracuse plant, which is
equipped with up-to-date facilities and machines for this work, and which
can build such equipment economically and rapidly.

In order to minimize transportation costs, to promote liaison between
the engineering group and the product, and to facilitate training for the
rather large number of service people required, we plan to assemble and
systems test ERMA equipment at the Computer System facility of the General
Electric Microwave Laboratory, Palo Alto, California.

We will install and check-out all equipments at sites to be specified
by the Bank of America. While we understand that the customer will be able
to provide his own maintenance personnel, other banks will undoubtedly
require maintenance service from us, thus making it essential for General
Electric to establish a training course for its

own
people. This same course would obviously be available for the training of
Bank of America personnel.

17. Inter-connection wiring as necessary between racks and other
equipment.

18. Instruction service and maintenance manual, quantity of 3.

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pic sheet 1\

Although our research and development effort in the
computer field has been largely special purpose military work in the past,
it is most logical that we now enter aggressively into the commercial
field of special purpose computers. We have been conducting intensive
marketing studies over the past two years to determine our most logical
type of products, and time of entry into this field. These and other
studies culminated the latter part of last year in the formation of the
Industrial Computer Section of the Electronics Division.

pic sheet 2

The General Electric Company has, for a number of years,
been active in the computer field. Development, design and production of
both digital and analog computers have been done on a surprisingly
large-scale basis. This work is little known to the country at large,
however, because it has been conducted almost exclusively for the
Department of Defense, usually on classified military contracts. Some of
General Electric's work known to commercial circles includes our OARAC,
OMIBAC, Jet Engine Power Control Simulator, Penalty Factor Computer, and
others.